Yesterday, the head of the world’s economic watchdog called for the Bank of England to cut interest rates even further, amid warnings the income squeeze could last another eighteen months.

Delivering her annual assessment of the UK economy in London, Christine Lagarde of the IMF said that the Bank of England should “reassess the efficacy” of cutting rates below the current record low of 0.5 percent; in an effort to reduce the costs of borrowing for businesses and homeowners.

Economic experts last night backed the IMF’s call for interest rates to fall, with one saying: “Cutting rates from 0.5 per cent won’t be the solution on its own, but would send out the right signal.”

The calls by the IMF for the Bank of England to cut the interest rates even further have raised questions as to whether the Bank of England will introduce its first zero percent interest rate since it was founded in 1694.

Christine Lagarde’s assessment of the UK economy is said to have delighted the Chancellor, George Osborne, due to it backing the deficit reduction measures in place; meanwhile, Labour have claimed that the IMF’s warning show that the UK needs to come up with a “plan B” to kick-start growth and stop the economy sliding further into recession.